Korean chaebols decide on downsizing operations

LG also said it would significantly reduce the chairman’s office in terms of size and function. Chaebols have in the past used the powerful chairman’s offices, usually not legal entities and composed of personnel dispatched from affiliates, to influence policy at affiliates.

The Samsung Group, the second-largest affiliate, said it would close three regional headquarters in New York, London and Singapore this month, and transfer their functions to the group headquarters in Seoul and individual affiliates.

As recently as last month Hyundai said it would go ahead with the plan to spend billions of dollars to build the steel mill in the southern city of Hadong.

Hyundai fought criticism not only from the government but from the country’s sole integrated steel mill operator, Pohang Iron and Steel Co that the scheme would lead to a severe domestic over supply of crude steel.

The first phase of the semiconductor plant in Scotland had been scheduled for completion at the end of 1998. Hyundai said it did not know yet when the project might be restarted.

Analysts say South Korea’s current debt crisis stems from excessive capacity expansion by chaebols. The IMF, which bailed out South Korea last year with huge loans, recommended that the country should slow its economic growth and improve corporate efficiency.